United States v. Tomko

498 F.3d 157, 100 A.F.T.R.2d (RIA) 5621, 2007 U.S. App. LEXIS 19755, 2007 WL 2350765
Court of Appeals for the Third Circuit·Decided August 20, 2007·No. 05-4997·Published·Cited by 5 cases

Opinions

OPINION OF THE COURT

FISHER, Circuit Judge.

The Government appeals from a judgment of sentence imposed on William Tom-ko, Jr., who pleaded guilty to a fraudulent scheme to evade personal income taxes. Tomko’s fraudulent scheme resulted in a tax deficiency of more than $225,000. The District Court imposed a below-Guidelines sentence consisting of 250 hours of community service, three years of probation (including one year of house arrest), and a [159] fíne of $250,000. Tomko was also ordered to undergo twenty-eight days of in-house treatment for alcohol abuse. As discussed below, this sentence is unreasonable in light of the circumstances of this case and the sentencing factors outlined in 18 U.S.C. § 3558(a). It was therefore an abuse of discretion for the District Court to impose it and we will vacate the judgment and remand for resentencing.

I. BACKGROUND

William G. Tomko, Jr., pleaded guilty to a fraudulent scheme to evade federal income taxes that revolved around the construction of his luxurious new home in southwestern Pennsylvania. From 1996 through 1998, during the construction of this home, Tomko had numerous subcontractors falsify their billing invoices to make it appear their work had been done for his construction company, W.G. Tomko, Inc. (“Tomko, Inc.”), at one of its job sites, rather than for Tomko, the individual, at his personal residence. As a result, the company paid the construction costs of the home, illegally deducted the expenses, and Tomko did not properly report the value of the construction costs paid for by the company as income on his personal income taxes.1 The scheme resulted in a stipulated tax deficiency of $228,557.

Numerous subcontractors were involved in Tomko’s scheme. One subcontractor, for example, who installed the lawn sprinkler system at Tomko’s residence, told Internal Revenue Service-Criminal Investigation Division (IRS-CID) investigators that he wrote billing invoices at Tomko’s behest that made it appear his work had been done at one of five local area schools. Because Tomko, Inc. was working jobs at these local schools, the company could appear to be legitimately paying the invoices.2 As a result, the construction costs were diverted from Tomko personally to Tomko’s company, which then deducted them as expenses. Similarly, another subcontractor, who installed the granite and marble countertops throughout Tomko’s home, told the IRS-CID investigators that Tomko had stated “I’ll pay you but this is how I want it written up.” Tomko then instructed him to prepare invoices indicating that the work had been done at one of the local area schools so that Tomko, Inc. could foot the bill and deduct the expenses.

There are even more egregious examples in the record of this sort of fraudulent misrepresentation. One subcontractor, who built custom cabinetry for Tomko’s house, stated that he was told by Tomko to “be creative” in his billing and that he had previously been “tipped” that Tomko was running the costs of the construction through his business. Another subcontractor, who installed stainless steel kitchen fixtures at the house, stated that Tom-ko told him he “wanted this job run through [a local school]” and that the billing invoice was to be sent to Tomko, Inc. Another subcontractor, who did specialty wiring at the house, stated that Tomko instructed him to prepare false invoices indicating that the services he had provided for the house were actually done for yet another local school.

[160] IRS-CID investigators interviewed seventeen individuals in all with respect to Tomko’s scheme. While the details vary from individual to individual, in most eases the pattern of conduct resembled the examples already described ! Tomko attempted to evade paying taxes by fraudulently diverting construction costs through his company, Tomko, Inc., deducting the costs as business expenses, and then failing to report as income the value of the services provided to him personally. On October 4, 2001, an IRS-CID agent contacted Tomko to advise him there was an allegation of unreported income against him and to request an interview. On May 11, 2004, Tomko waived indictment and pleaded guilty to a one-count information charging tax evasion for 1997, in violation of 26 U.S.C. § 7201.

Tomko was sentenced on September 30, 2005.3 At the sentencing hearing, the District Court properly recognized its obligation to calculate the correct advisory United States Sentencing Guidelines (“Guidelines”) offense level and concluded that the applicable offense level was thirteen.4 The recommended Guidelines sentencing range for this offense level is twelve to eighteen months of incarceration, but defense counsel proposed, in lieu of imprisonment, that Tomko be allowed to do volunteer work with Habitat for Humanity and assist in its efforts to provide housing for victims of Hurricane Katrina. Counsel stated “I wouldn’t ask that normally, Your Honor, but it seems to me that if he were sitting in prison, whether it’s minimum security or medium security or whatever, and he could be helping the people who have been so devastated so significantly in the New Orleans area and in the Gulf Coast area....”

Defense counsel then presented as a witness the Executive Director of the Pittsburgh affiliate of Habitat for Humanity, who was first contacted about Tomko’s interest in volunteering, after Tomko’s guilty plea. The Director was generous in her appraisal of Tomko. She testified that his construction expertise and local contacts had helped the organization immensely and that he had been able to contribute substantially to a number of their ongoing construction projects. She [161] outlined the Pittsburgh Habitat for Humanity’s plans to aid in the Gulf Coast reconstruction efforts by building prefabricated housing (“Home in a Box Program”) for shipment to the Gulf Coast and Tom-ko’s assistance in that effort.

Defense counsel also proffered testimony from Tomko, Inc.’s chief financial officer stating that Tomko’s absence from the company could very well place Tomko, Inc. in dire straits financially. The Court indicated that it had reviewed and considered all motions and briefs submitted by the parties. One of these motions was a Motion for Downward Departure, in which defense counsel stated as grounds for downward departure: (1) the effect incarceration would have on Tomko’s business, causing a job loss to more than 300 innocent employees; (2) Tomko’s exceptional charitable and community activities; (3) extraordinary acceptance of responsibility; and (4) a combination of factors. The motion included as exhibits over fifty letters from friends, family, and community leaders attesting to Tomko’s generosity and compassion.

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United States v. Tomko, 498 F.3d 157, 100 A.F.T.R.2d (RIA) 5621, 2007 U.S. App. LEXIS 19755, 2007 WL 2350765 (3d Cir. 2007).

498 F.3d 157 (United States v. Tomko) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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